Due to inflation, IRS raises standard deduction and tax brackets for 2023
The Internal Revenue Service announced on Tuesday that in 2023, it is increasing the standard deduction and income thresholds for all tax brackets, meaning many Americans will see an increase in their paychecks starting in January.
These adjustments are due to inflation, and include the largest increase to the standard deduction since 1985, The Washington Post reports. For individuals, the standard deduction will go up to $13,850, a $900 increase from 2022, and for married couples, it will rise to $27,700, an increase of $1,800.
The top tax rate, 37 percent, will apply to individuals whose income is above $578,125 and married couples filing jointly with an income of more than $693,750. In both cases, that's up 7 percent from 2022.
This will be reflected in paycheck withholding statements in January. These changes come after the Social Security Administration announced last week that a cost of living adjustment (COLA) of 8.7 percent will go into effect in 2023, the largest COLA increase in four decades, the Post says.
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